This past Friday, the Atlantic’s Matthew O’Brien dug up a study by Northeastern University which found that, after submitting an application for a job, a person’s chances of being called back for an interview completely collapse if they’ve been out of work for more than six months.

Researcher Rand Ghayad sent out 3,600 fake resumes to 600 job openings. He held constant the gender, educational background, and the racial ambiguity of the names of the fake applicants. But he mixed up how long the fake applicants had been out of work, how often they’d switched jobs, and whether they had any industry experience. In a result O’Brien understandably characterized as “terrifying,” the length of unemployment completely overwhelmed the other two variables as an influencing factor on who got a call back:

As long as you’ve been out of work for less than six months, you can get called back even if you don’t have experience. But after you’ve been out of work for six months, it doesn’t matter what experience you have. Quite literally. There’s only a 2.12 percentage point difference in callback rates for the long-term unemployed with or without industry experience. That’s compared to a 7.13 and 8.95 percentage point difference for the short-and-medium-term unemployed.

There was no similar drop-off for how often a worker had switched jobs in the past. Fake applicants who’d gone through five to six jobs but had experience in the relevant industry were still over 7 percent more likely to get a call back than those without experience. And the latter’s chances were roughly equal to someone who’d only held one or two jobs but lacked relevant experience.

O’Brien recommends that the government start targeting the long-term unemployed for hiring. (The long-term unemployment problem following the Great Depression, for example, arguably wasn’t solved until the mass government-hiring program otherwise known as World War II.) That’s further than any lawmakers have yet proposed going, but in 2011 President Obama and the Democrats tried to something about this exact problem. Their $447 billion American Jobs Act included a tax credit worth up to $4,000 a piece for any firm that hired someone who’d been out of work longer than six months.

The legislation was, of course, filibustered to death by Senate Republicans.

At that point, 6.2 million people were in the ranks of the long-term unemployed, and the number was still over 5 million as September 2012. No small part of that decrease is due to people giving up on finding work entirely, and thus no longer showing up as part of the labor force. The longer these Americans have to go without the chance to work, the more damage is done to their own individual ability to flourish, and thus to the long-term health of the economy as a whole.

In Part I of this essay, I argued that we need a new way of thinking about utopia that is appropriate to today’s modernizing progressive coalition. That approach should start by embracing new findings on human nature and economics that provide the basis for an expansive vision of humanity’s future (see related posts here and here).  And it will reject the left’s currently gloomy view of progress, which confuses current problems with long-term trends.  It is true that rising inequality in the US and some other countries has limited the benefits of economic growth.  It is true that globalization has produced its share of losers in the US and that globally many nations are still mired in poverty.  It is true that world economic progress is promoting serious climate problems.  But economic growth and globalization as long term trends are still far more beneficial than harmful, a fact which resonates with this emerging coalition, even if it no longer does with the traditional working class.

The last point is critical.  For many on the left, a positive attitude toward economic growth and globalization seems counterintuitive.  After all, isn’t there a basic lack of progress in the world today—aren’t things just getting worse rather than better?

No, in fact they’re getting better — much better — and that is despite trends toward increased inequality which have damped down economic advance for average citizens in some countries.  Consider the American case, where trends toward inequality have been particularly serious.  In 1947, the median family income in the US was around $27,000 in today’s dollars.  Today, median family income is around $61,000. Looked at another way, in 1947, 60 percent of families made under $30,000.  But today only around 20 percent make less than that figure and 40 percent make over $75,000, a figure that was exceeded by less than 5 percent of families in 1947.

By 2040, median family income should be considerably higher , though how much higher depends on economic policy and choices we make as a society.  But if we see growth that is merely average for the post-World War II period, the median family could be making close to $100,000 in today’s dollars.  American GDP will be around 27 trillion dollars, more than double its current size, for a population that will be only a third bigger.  American will not just have a mass middle class, as was created after World War II, but, in living standards terms, a mass upper-middle class.  What is privileged today will be commonplace tomorrow.

Switching to a worldwide view, since 1955, the average person earns three times more today than they did back then and eats one-third more calories of food.  The percentage living in absolute poverty has dropped by more than half, down to under 18 percent.  If current trends continue that percent will soon be in single digits and could even approach zero in the decade of the 2030’s.  The UN estimates that that poverty has been reduced more in the last 50 years than in the previous 500.

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In a previous post, I wrote about the emerging view of human nature as fundamentally cooperative and group-oriented rather than simply self-interested as most conservatives believe.  I noted that this paradigm shift has important implications for progressives in a political sense.  We should not shy away from appeals to cooperative instincts and the common good because they are “fuzzy” and “soft”.  Instead they should be front and center because they touch something deep within our basic nature.

But that’s not all the implications of these new findings.  There are also very important implications for economic policy.  Start with middle class economics.  This school of thought, associated with progressive economists like Robert Reich, Joseph Stiglitz, Paul Krugman and progressive institutions like (ahem) the Center for American Progress, ties progressive policy proposals directly to the interests and capabilities of the middle class. Since the middle class as a group embraces a huge swathe of American society, this is a very promising framework for a group-oriented appeal.

The new theory of human nature also casts considerable doubt on the standard model of economics, based around neoclassical assumptions that people are solely motivated by self-interested concerns.  As we have just seen, they aren’t, which poses a rather fundamental problem for mainstream economics.  The problem deepens when the other key part of the standard economic model is recalled: people rationally, efficiently and effectively pursue that self-interest at all times, carefully calculating probabilities and assessing costs and benefits so they can get the best possible deal for themselves—like a sort of self-interested Mr. Spock.  People aren’t like that either, as the evolving science of behavioral economics has clearly established.

Behavioral economics has found, based on observation of actual people making decisions, that people don’t understand probability, under- and over-estimate risk, respond heavily to how choices are framed and generally fail, in a wide variety of contexts, to “rationally” pursue their goals.  These results, now widely accepted even within mainstream economics, have been well-summarized by Cass Sustein and Richard Thaler in their book Nudge and by Daniel Kahneman in his book Thinking Fast and Slow.

So we’re not purely self-interested and we do a spotty job of pursuing that self-interest when we try.  What does this say about standard models of the economy based on aggregating the assumed efficient, self-interested actions of millions and “proving” that everything works out for the best if those efficient, self-interested individuals are left alone?  Nothing good.

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Arguments over the feasibility and morality of economic growth as a continuing societal goal typically pit left wing critics of capitalism, traditionalist conservatives, and strands of the environmental movement against mainstream liberals and those on the libertarian right.

There are two primary criticisms of growth from the left-traditionalist camp.  One, is an ecological argument about “the limits to growth,” dating back to 1972 and start of the modern environmental movement, which argues that we cannot sustain the type of consumer capitalism we’ve embarked on over the past 40 years without global “overshoot” that will eventually lead to environmental catastrophe, resource depletion, pollution, and scarcity.  A second line of attack is a moral argument that contemporary growth-oriented capitalism inevitably exacerbates poverty and inequality, undermines democracy, and sacrifices traditional values, families, and communities to the amoral logic of markets.

The “limits to growth” folks usually get the short end of the stick in these discussions and are too often painted as reactionaries, radicals, or Luddites.  But they raise a series of important points about the nature of modern capitalism and liberal democracy that progressives should consider.  As Gus Speth outlines in his beyond growth manifesto, inequality is at record levels within our own country and in relation to others.  Global climate change continues unabated despite a zillion conferences and plans to combat it.  Corporations and the wealthy exert too much control over our democratic governments.  People buy too much stuff and we produce too much waste.  We spend too much on the military and too little on the social needs of our own people.  These are uncomfortable trends for the proponents of unfettered growth to acknowledge.

Pro-growth liberals push back that despite its drawbacks, a steadily expanding economy is critical to achieving the type of society progressives hold dear.  Robert Reich and Benjamin Friedman argue that growth leads to a whole host of desired outcomes from improved education and health care to rising tolerance and respect for individual rights.   As Friedman writes, “Economic growth—meaning a rising standard of living for the clear majority of citizens—more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy.”  These are clearly important political and social outcomes of economic growth that post-growth proponents tend to downplay.

Can these two perspectives be reconciled?  Yes, if we structure the right kind of growth, which is essentially a political decision.  Here’s Reich:

Growth is different from consumerism. Growth is really about the capacity of a nation to produce everything that’s wanted and needed by its inhabitants. That includes better stewardship of the environment as well as improved public health and better schools. (The Gross Domestic Product is a crude way of gauging this but it’s a guide. Nations with high and growing GDPs have more overall capacity; those with low or slowing GDPs have less.)

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Smart Growth America released a new report yesterday — first picked up by Grist — that highlights the way federal housing policy is grossly tilted to the benefit of the well-off.

Between loans, tax expenditures, and subsidies, the federal government spent approximately $2.23 trillion on housing from 2007 to 2011. Most of that was in the form of loan programs for single-family homes and tax expenditures aimed at home ownership, even though low-income Americans are far more likely to live in small, multi-family buildings and to rent, and are far less able to take advantage of tax expenditures and a complex tax code. Adding up both direct spending and tax subsidies, Smart Growth America concluded that households making over $200,000 a year receive far more housing support from the federal government than any other income group:

This lines up with a similar study from the Center on Budget and Policy Priorities, which found that over half of all federal housing spending and tax expenditures benefited households making over $100,000 in 2010.

The study did not cover the involvement of GSEs Fannie Mae and Freddie Mack in the housing market, as these are quasi-government agencies taken into conservatorship by the federal government. But the loan support they provide is also skewed towards single-family properties.

The CBPP has also found that the number of low-income families paying over half their income in rent while receiving no rental assistance hit 7 million in 2011 — an increase of 42 percent since 2001. Low-income families are also far more likely to rent than to own a home, and 35 percent of all U.S. households are renters.

The programs most directly aimed at low-income Americans are the various rental assistance grants and credit subsidies run mainly the Department of Housing and Urban Development. These totaled a mere $187 billion over the 2007 to 2011 period covered by Smart Growth America’s study. And due to funding limitations, these programs have not kept up with the growth in families struggling to pay rent.

The Nuns On A Bus Tour, a protest against spending cuts mandated by the House GOP budget, stopped yesterday outside the district offices of Rep. Paul Ryan (R-WI), the budget’s author. The stop, the second of 10 that the nine-state tour will make, followed an event at Rep. Steve King’s (R) Iowa office on Monday.

The nuns were greeted by “a couple hundred” people, according to the Huffington Post. Sister Simone Campbell, who organized the tour, called Ryan’s budget “irresponsible” for cutting food assistance and other safety net programs. Here are photos from the stop outside Ryan’s Janesville, Wisconsin office:

(Photo via Phil Haslanger, Huffington Post)

(Photo via Phil Haslanger, Huffington Post)

Ryan issued a brief statement in response to the protest but, like King, did not mention the nuns. Instead, Ryan returned to his standard line about the budget, saying it sought to solve “growing dependency on government assistance” and a looming “debt crisis.”

Thanks in large part to the Occupy Wall Street movement, the debilitating effects of income inequality have been hoisted into the national spotlight. But in addition to killing economic growth and economic mobility, income inequality also exacerbates political inequality.

Today, ThinkProgress spoke with MIT economist Daron Acemoglu, whose new book, Why Nations Fail (co-written by James Robinson), looks at the effect politics and policy have on economic growth and prosperity. Acemoglu said that he believes the most “pernicious” effect of income inequality is that it drains political power from lower- and middle-class Americans and allows the richest to then begin “changing the rules in their favor”:

I think there’s a lot of debate about the economic impact of income inequality. There’s literature on how greater inequality might slow economic growth because it creates a less conducive environment for consumer demand or credit. But at the end, my view, and that of our book with James Robinson, is that the more pernicious effect of economic inequality comes indirectly through its impact on political inequality. it’s a general pattern throughout history, and we see around today, that when economic inequality increases, the people who have become economically more powerful will often attempt to use that power in order to gain even more political power. And once they are able to monopolize political power, they will start using that for changing the rules in their favor. And that sort of political inequality is the real danger that’s facing the United States.

Watch it:

Acemoglu added that the Supreme Court’s decision in Citizens United and the growth in Super PAC spending are only going to make this problem worse by increasing the importance of money in politics. “We already had a very serious problem,” he said. “Instead of trying to stem that tide, we’ve done the opposite and we’ve now opened the sluice gate and said you can use that money with no restrictions whatsoever.” According to calculations by Council of Economic Advisers chairman Alan Kruegar, the shift in income inequality over the last three decades has been the equivalent of moving $1.1 trillion of income from the 99 percent to the top 1 percent every single year.